Goldman analyst Currie (see video link below), says that in the aftermath of over-production booms where easy credit has spurred wild-eyed speculation, durable price bottoms are not reached until ‘believers’ capitulate, throw in the towel on rebound bets, and finally move whatever capital they have left to the sidelines or other sectors. So far we have not seen this yet in the energy secotr, as every rally to date has brought another burst of hope–and production.

“The risk of $20 is driven by what we call a breach in storage capacity, meaning that you have supply above demand, you fill every storage tank on planet earth and then you have nowhere to put it,” Jeff Currie, head of commodity research at Goldman told CNBC from the annual Oil & Money conference in London.”(Then) supply has to come down in line with demand. The only way you get that correction is prices crash down to cash costs, which for a U.S. producer, is somewhere around $20 a barrel.” Jeff Currie, global head of commodities research at Goldman Sachs, says the risk of crude oil reaching $20 a barrel is driven by “breaching storage capacity.”Click Here to see interview